MDA launching $108-million R&D collaboration with suppliers and academia

First award under TDP

By Debbie Lawes

Canada has funded the first collaboration under its Technology Demonstration Program (TDP), nearly three years since launching and three and a half years after a federally commissioned panel warned that Canada will lose its position as a global aerospace power without new investments. The May 5 announcement will see MDA Systems Ltd and its partners receive a $54-million non-repayable contribution over five years, the maximum allowed under the program.

The partners will spend an additional $54 million — with about half coming from MDA — to develop and demonstrate new technologies for next-generation radar, optical and communications satellites and associated data processing.

Ottawa-based MDA Systems, a division of Richmond BC-based Macdonald, Dettwiler and Associates Ltd, is partnering with five companies on the research: Whipcord (Lethbridge, AB), COM DEV International and exactEarth (both from Cambridge, ON), Magellan Aerospace (Winnipeg, MB) and UrtheCast (Vancouver, BC). The lead academic partner is Simon Fraser Univ, a longstanding partner of MDA.

TDP, which focuses on the aerospace, space, defence and security sectors, was launched in September/13 in response to a November/12 report led by former cabinet minister David Emerson, who warned at the time that Canada's space program had "foundered". The report's recommendations included increased federal support for aerospace technology demonstration projects and collaborative research, which it noted "are not large by international standards" (R$, December 6/12).

"People view this as a very significant program when it comes to the commercialization of technology and innovation … The interest is extremely high," says Aerospace Industries Association of Canada president and CEO Jim Quick, one of Emerson's advisors on the review.

Ian McLeod, MDA's VP business development, says the co-funding will help Canadian space companies catch up with competitors, particularly those in Europe which receive more generous public support for early-stage technology development.

"For Canada to be competitive, we need the same kind of levers as our competitor countries … ($54 million) is not massive, but it's an important step in the right direction," says McLeod.

TDP supports higher risk, large-scale projects at Technology Readiness Levels (TRL) 1 through 6. It also encourages greater collaboration between large, medium and small companies, as well as academia. In comparison, the much larger Strategic Aerospace and Defence Initiative program supports a single company working on projects closer to commercialization (TRL 7-9). SADI funds are also repayable.

"TDP is intended to strengthen the supply chain and at an earlier stage," says Lisa Setlakwe, executive director of the Industrial Technology Office at Innovation, Science and Economic Development (ISED) Canada. "Companies need incentives to undertake this type of research because it's high risk."

Without support from TDP, McLeod says MDA's R&D costs would be too high, making them less able to compete on price. "You can't afford in many of these bids to have a whole lot of non-recurring engineering … From that point of view, (TDP) fit really well because we're always trying to get our technologies to the point where they are bid-ready, where we've retired the risk and are confident that we can give a firm fixed price bid into a competition."

"No (customer) is willing to pay the cost to build something from scratch when your competitor is showing up with something they have already demonstrated," adds McLeod.

Another winner pending

TDP was launched with a budget of $110 million over four years beginning in FY14-15 and $55 million annually thereafter. As only one award has been made to date, Setlakwe says most of the money remains uncommitted.

The program's first-round competition received nine statements of interest in December, 2013, with three invited to submit full proposals. Of those, two winners were chosen, a company that subsequently withdrew its application and MDA. Setlakwe says they've since worked out "some of the kinks" in the program and now expect a faster turnaround on future competitions.

"It was a brand new program so we learned some things in these first two rounds that will help us to expedite things for future rounds," she says. "That it's a collaboration model does make things a bit more complex."

Quick, whose association worked with government to design the program, suggests the emphasis on national collaborations may not be as necessary as initially thought. "We'll have to look at those (requirements) as the program matures to see if we still need to continue to do that." He adds that the structure and fundamentals of the program, including the relationship between the proponents, the supply chain, academia and the regions, are "a pretty good mix."

A second competition in June 2014 elicited eight statements of interests with five proceeding to the full proposal stage. Setlakwe says a winner has been selected and will be announced once contract negotiations have been finalized. A third competition is planned before March 2017.

The 2016-17 federal estimates state that ISED will "consider enhancements to the program's design and procedures". While some small changes may be made before then, Setlakwe says "let's see what results we're getting from these projects first before we look at any other major enhancements."

An external TDP advisory committee comprised of industry stakeholders will feed into this process. The most recent committee included representatives from General Dynamics, Bombardier Aerospace, ComDev, Heroux Devtek, Sentra Industries, C4i consultants and Marinvent Corp.

MDA has been ramping up its research investments this decade. Data compiled by Research Infosource show the company's R&D spending more than doubled, from $60 million in 2010 to $139 million in 2014.

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